Turnover is vanity, profit is sanity, cash is reality!

Posted by Jan06, 2015 Comments Comments Off
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This is the quickest lesson in business: Turnover is vanity, profit is sanity, cash is reality!

I find our industry is too obsessed with lodgements and settlements… that’s all vanity.

Things like lodgements, # of new leads, # of client meetings, hours worked per week are all vanity. That is, lots of brokers like to talk about how much they lodged, how busy they are and how many hours they work but it’s really not always that meaningful or important.

For example, what about if I pay large referral fees (commission splits)? Am I really making any profit after I account for the amount of time it takes to write the deal? If it takes many months and hours of work to get refinances to settle then are you really making money? Is my average loan size high enough to compensate me for the hours I work? There are lots of businesses out there with millions of dollars in turnover that are making very little profit, if any! What the point of that?

The amount of hours it takes to win a client and settle the deal is sanity. You get some deals where a client calls up and needs to borrow $1m because they bought a property on the weekend on a 30 day settlement – that is highly profitable! Perfect. Compare that to a client that is a serial pest, asks millions of questions and is all over the place. No one’s making any money there. That’s insanity. Profit is sanity because without it, you don’t survive.

Cash is the amount of money left in the bank at the end of the month after paying for all expenses and that’s reality. Who cares if you have awesome lodgements and profitable clients if you always finish the month without any money in this bank?!?! Cash is the lifeline of any business.

Hopefully you will sit down and do some business planning in January to plan out your year. When you do this you need to think very carefully about this formula: turnover is vanity, profit is sanity, cash is reality. Specifically, you need to define and focus on a profitable niche target client/market and then develop a proven sales system that is designed perfectly for your target market. This will hopefully maximise your lodgements whilst minimise your time.  Systemise as much as possible. Do this and you are a long way to maximising your cash in the bank! Good luck.

P.S. In a few months I plan to launch a new online training course that gives you an effective annual review and referral generation system… so keep an eye out for it.


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Give no more than 3 reasons for your recommendation!

Posted by Nov28, 2014 Comments Comments Off
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When making a loan recommendation to a client, how many reason do you give to justify that recommendation? You might cite the low interest rate, the features of the professional package, the banks service, turnaround times, borrowing capacity, free valuations, fee waivers and special offers and the list goes on. But new research suggests you could be doing yourself (and your client) a massive disservice.

In Robert Cialdini’s new book, The Small BIG he cites research that suggests the more reasons you give to why someone should do business with you or why you recommend a certain lender/product, the weaker the overall proposition. This might seem counter intuitive but the theory is that if I give 10 reasons for why a client needs to use Westpac it is difficult for the client to assess which reasons are the most important and which reasons are just ‘bells and whistles’. As such, the weaker reasons detract from the stronger reasons (i.e. the strong reasons don’t seem that strong anymore).

Let me give you an example. Assume my client David needs to borrow a certain amount, say $700k and whilst its clear he can clearly afford it, due to lenders credit policies there is only one lender that will prove a loan amount of $700k and that is CBA. So I tell David that I recommend CBA because they will give him a 1% discount in the pro pack, their service is good, they have an offset and they will approve the required loan amount. If you were David, which reason do you think is the most important – research says he’s likely to think all four reasons are equally as important. However, there really is only one reason why I recommended CBA. Adding in the CBA’s service is good for example weakens my recommendation.

A far stronger recommendation would be “CBA is the only lender than will approve a loan of $700k so we have to use them”. Doing so means that David will probably ignore the lower rate offer from Suncorp because he knows it won’t approve the required loan amount.

Therefore, think about the reasons you are recommending a lender/product and only mention the important reasons – no more than 3 reasons research says. If you have “10 reasons why you should use us” on your website, shave the reasons down to the top 3.

Of course, make sure the reasons are important to the client – mentioning that the lender has an offset will not help if an offset isn’t important to the client.



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Learn from my personal business coach

Posted by Nov03, 2014 Comments Comments Off
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I know you’re busy, but if you can, do yourself a favor and watch this complimentary video series about getting your business model right by my business coach, Andrew Roberts.

Click here to watch this training for free. I wouldn’t recommend it if I didn’t think it was awesome.

I worked with Andrew for a couple of years and he helped greatly improve my mortgage business and more importantly, my life. He’s an experience entrepreneur and “does” as well as “teaches”. And that was really important to me when deciding to work with him. He speaks from experience, not a text book.

He has worked with many other brokers and some of the top business owners around Australia.

This video will help you learn that in order to be successful, you need to be passionate – but more importantly – you need to have a great business model.

He teaches you that your model is everything. He will also show you that with some tweaks to your model, you have the ability to create a much more profitable broker business in a short time frame.

Andrew has built and sold two of his own companies, and I know you will get a lot from this complimentary video training.

Again – the link – click here.

Have a great week!

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Every client you deal with will teach you a lesson. It will be a lesson about something you did right or something you did wrong but the lesson is there if you are open to receiving it. Some brokers spend their time blaming clients and prospects. Things like “that client just didn’t get it, that client didn’t value my time, that client used me and ended up going direct to the lender” and the blame game goes on. However, it’s not the client’s fault. You can’t control the client but you can control yourself and your reaction to clients. Ask yourself if it’s something you have done:

  • If you booked a meeting with a client without qualifying them properly over the phone, is it their fault they wasted your time? You chose to be undisciplined and not follow your system.
  • If your gut told you that this prospect is a time waster and it eventually turns out just how you expected it, is it the client’s fault? You chose to ignore your better judgement.
  • If you discount or waive your standard fee just to win the business, is it the clients fault for not valuing your advice/service?  You chose to undervalue yourself.
  • If you meet a new prospect and win their business quickly and simply, is it because of the client? Or did you perfect your sales process? You chose to be the best you could be.

I have chosen to try and build a successful business. I have not chosen to always be right.


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Most mortgage brokers don’t charge for their service. This is often viewed by the client as a benefit i.e. they essentially get something for nothing. Whilst I think it’s a benefit too (from a mortgage brokers standpoint), the risk is that we teach our clients to value our service at the price they pay – nothing.  So it is critical that you do something to avoid this. Let me share an experience with you that I had this week that reminded me about this point.

About 18 months ago I made an incredibly stupid decision (in hindsight) to offer 3 clients free financial planning advice as a reward for their custom and loyalty. Clients had to apply for the free advice and indicate why they wanted help. I then selected 3 clients who I thought were loyal and deserved the investment of time. I will never do this again. There were a few things that didn’t work but mostly the problem was that because the advice was “free”, they didn’t value it. The lesson I learnt is to never offer something for free or discount prices when it comes to selling advice. The right clients will always pay a fair fee. The wrong clients will be attracted to “free” or ask for discounts.

But what does this experience have to do with broking? Well, the risk is that because you don’t charge, the client won’t value your time, advice and service. Given this, we need to be vigilant in communicating our value to clients as often as possible (within reason) and never stop. A good recent example in my business is we did a valuation with lender A and the valuation came in $200k less than the customer’s estimate. We went to Lender B and the valuation came in bang on the customer’s estimate. This is a benefit that is exclusive to dealing with a broker, as opposed to going to the lender directly. We need to communicate this benefit: “I’m so happy we were able to help you overcome the stupid valuation Lender A did. This is the benefit of dealing with us. We’ll always be ready to find you the best lender that suits you at any particular time. We always look after your best interest”. There are many advantages we offer compared to dealing directly with lenders and some benefits compared to other broker. Always communicate them.

And if you can get the client to actually say out loud to you “I’m very happy with your service”, it will make a big psychological difference to their feeling about your business (based on research).

If you always assume your clients don’t value your time/service until you talk to them about it, you won’t be disappointed.


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